Housing association in talks to rescue Olympic village

Lend Lease’s developer role hangs on a deal with Southern Housing Group

Olympic bosses have lined up housing association Southern Housing Group as part of an eleventh-hour deal to help solve the crisis over funding for the £1bn athletes’ village.

Development sources this week said the Olympic Delivery Authority (ODA) was hopeful the deal would allow main developer Lend Lease to secure its share of funding for the project.

The Olympic Delivery Authority (ODA) has been seeking a third partner to help East Thames Housing Group and regeneration developer First Base build the social housing element of the scheme in order to mitigate the financial risk to any one party.

It is understood that Southern Housing Group is in talks to take on the role and that Lend Lease’s future involvement as a developer rests on a deal being reached.

The ODA admitted in June that Lend Lease was unable to raise all of the funding to build the 2,800-home athletes’ village as previously intended. Building reported in August that this left a £400m hole in the £1bn project.

At present, the ODA is funding construction, with Lend Lease working merely as contractor, although it can buy itself back into the deal at a later date.

The ODA is keen to secure an agreement, earmarked for January, that will avoid it paying all the construction costs.

A deal can’t be signed until another social housing provider is tied down

Source close to the talks

Two separate sources said Southern Housing Group was now crucial to making the deal work. It is believed that Lend Lease’s banks are keen for risk to be spread between as many organisations as possible.

A source said: “Lend Lease still has some money on the table – not anything like the original amount – but a deal can’t be signed until another social housing provider is tied down.”

East Thames Housing Group and First Base approached Southern about a month ago to get involved in the development. About 30% of the homes are likely to be affordable.